contestada

If the federal reserve decreases the reserve rate from 7% to 5%, how does this affect the amount of money that would result because of fraction-reserve rbanking from an initial deposit into a bank of $30,000

Respuesta :

Aliwohaish12
If the federal reserve rate was 7%, the money supply would be
30,000÷0.07=428,571

If the federal reserve rate was 5%, the money supply would be
30,000÷0.05=600,000

If the federal reserve decreases the reserve rate from 7% to 5%
600,000−428,571=171,429
The money supply increases by 171429

Hope it helps!